Sunday, August 10, 2008

SACRAMENTO — It was an ugly week at the Capitol, where the only promise that emerged was that the state's budget crisis will likely linger for a while longer.

Lawmakers traded accusations over who was stalling budget negotiations. Tensions mounted as legislative leaders from both parties appeared ready to dig further into their trenches. For now, they've stopped talking with one another in what looks like a waiting game.

Democrats want to beef up revenues with taxes on the wealthy to close the $15.2 billion deficit. Republicans favor spending cuts over taxes and are insisting on budget reform that limits spending in the future as part of an overall budget agreement.

Spanning the middle is a wide gulf that no one appears ready to bridge.

"It's as childish as it can get," said Larry Gerston, political science professor at San Jose State University. "Neither side is willing to give. Each side believes the other will fold. It may be good for posturing. But you've got the entire state being held ransom."

Political observers are predicting that if lawmakers don't come to agreement soon, they could be headed into the longest standoff in the state's history. It's been 40 days since the deadline to approve a budget, and though the record is a long way off — 67 days, set in 2002, when the Legislature waited until Sept. 5 to approve a budget — it could be threatened.

A key issue is the Secretary of State's Aug. Advertisement16th deadline to place constitutional amendments on the November ballot. Lawmakers must come to an agreement by that date on a budget and a spending cap reform Republicans are seeking that would require voter approval. But Democrats oppose a spending cap, saying it would tie the hands of future lawmakers. Republicans accuse Democrats of deliberately stalling in budget negotiations to avoid the deadline, and threatened a long holdout if they do miss it.

Though Democrats hold a healthy majority in both the Senate and Assembly, they're forced to accommodate Republicans by a two-thirds vote required by the constitution. Two Republicans in the Senate and six in the Assembly are needed to reach the two-thirds threshold.

Senate minority leader Dave Cogdill, R-Fresno, complained Friday that Democrats aren't showing any sense of urgency. It's now been three weeks since all four legislative leaders — called the Big 4 — have met.

"I can only conclude that the lack of negotiations stem from the Democrats' unwillingness to talk about any solutions that do not include a tax increase," Cogdill said. "We can balance this budget without tax increases, and it is imperative that we do so now."

A frustrated Schwarzenegger has worked to prod lawmakers into action, signing an executive order to lay off thousands of part-time state employees and cut the wages of thousands more to the federal minimum wage of $6.55 an hour. He declared last week he would refuse to sign any bills until the budget was finished.

Schwarznegger, criticized earlier for a hands-off approach to the negotiations, also floated a one-cent sales tax increase last week, hoping to stir movement.

And Schwarzenegger claimed the state's cash situation is dire, saying if they don't get a budget by Aug. 25, the state would have to borrow a line of credit — at a cost of upwards of $100 million in interest.

But many saw his moves as stunts that would have little effect on pushing lawmakers into agreement.

It didn't help that state Controller John Chiang, a Democrat who insists he will not issue reduced paychecks, has also challenged the governor on the state's cash status. On Friday, he announced the state has enough cash to stay afloat through September and into October.

Fittingly, last week the governor had to close down his courtyard smoking tent — where he likes to relax and have a stogie as he barters with lawmakers — until the end of September as the Department of General Services repairs the Capitol roof.

Still, Schwarzenegger is likely the key to bringing the two sides together, said Barbara O'Connor, director of the Institute for the Study of Politics and the Media at Sacramento State.

"The governor is the wild card," O'Connor said.

When two groups are at an impasse, she said, a third party is needed — preferably someone with no vested interests.

"The governor seems willing to jettison things to get it all done, so he could play that role," O'Connor said. "They need something that takes them off their entrenched positions, a new idea that allows all sides to save face. And the urgency of the crisis has to be really believed."

To start, she said, he could call a special session on the budget and threaten to take it through the end of August, forcing Democratic lawmakers to miss the Democratic National Convention in Denver Aug. 25-28.

Senate leader Don Perata, D-Oakland, appeared to pre-empt that move by declaring last week he was willing to force lawmakers to remain in Sacramento during the convention to finish the budget. Observers, however, said he may face pressure from his own caucus to get it done as the convention date gets closer.

But it will take compromise, an elusive feature in the Capitol these days.

"Nobody has the slightest ability or interest in compromising," said Tony Quinn, a former Republican staffer who is now the co-editor of the California Target Book. "But the structure — a two-thirds vote — is set up where you have to."